Analysis of Budget Essay

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Executive Summary

The budget size for the year 2013-14 is Tk 222,491 crore. The budget is 16 % higher from the current fiscal year. The revenue target of the budget has been set at Tk 1,67,459 crore while the budget deficit will be Tk 55,032cr, which is 4.6 % of the gross domestic product. Of the revenue, Tk 1,36,090cr is expected from NBR tax revenue, Tk 5,129 crore from non-NBR tax revenue and Tk 26,240cr from non-tax revenue. The government expects Tk 6,670cr in foreign grants.

Budget FY: 2012-2013 at a Glance:

• Size of the Budget will be around BDT 2224 Billion

• Size of ADP could be BDT 658 Billion

•Total Income: 1741 Billion

• Targeted GDP Growth Rate 7.2%

• Revenue Earning BDT 1360 Billion (from NBR source)

• Priority given to

Check Inflation

Facilitate Power Sector

Promote Agriculture etc

Reinforcing Priorities

Budget 2013-2014 confirms government’s ongoing commitment to its key fiscal plan objectives:

• Protection of essential health care, education, and social services;

• A fiscally sustainable taxpayer-supported debt to GDP ratio that maintains a AAA credit rating.

In support of these priorities, government is continuing its management strategy of prudence and spending discipline.

Budget 2013-2014 focuses on maintaining government services within existing budget allocations for most ministries, requiring them to continue to carefully manage priorities. Incremental funding has been provided to key core services, including healthcare, K-12 education, justice and social supports. Budget reallocation have been made through the draw down of the Contingencies vote and from administrative efficiencies and reduced debt servicing costs. Over the fiscal plan period, government will be redirecting over $1.0 billion to priority areas in ministries.

Estimated Revenue and Expenditure for FY2013-14

Estimating of Revenue Income
The revenue income for FY 2013-14 has been estimated at Tk. 1,67,459 crore which is 14.1 % of GDP, of which NBR tax revenue is Tk. 1,36,090 crore (11.4 % of GDP). Revenue from Non-NBR sources has been estimated at Tk. 5,129 crore (0.4 % of GDP). In addition, Tk. 26,240 crore (2.2 % of GDP) will be collected as Non Tax Revenue (NTR).

Estimating of Expenditure
The total expenditure for FY 2013-14 has been estimated at Tk. 2,22,491 crore (18.7 % of GDP). The allocation for non-development and other expenditure has been estimated at Tk. 1,56,621 crore (13.2 % of GDP). Expenditure for ADP has been estimated at Tk. 65,870 crore (5.5 % of GDP).

Budget Deficit & Financing
The overall budget deficit will be Tk. 55,032 crore which is 4.6 % of GDP. Of this amount, Tk. 21,068 crore (1.8 % of GDP) will be financed from external sources and Tk. 33,964 crore (2.9 % of GDP) from domestic sources. Of the domestic financing, Tk. 25,993 crore (2.2 % of GDP) will come from the banking system and Tk. 7,971 crore (0.7 % of GDP) from savings certificates and other non-banking sources. Govt. increased budget deficit. So, Govt. financed by borrowing from banking system. Bank may become liquidity shortage. Interest rate goes up. That’s why production cost goes up. So, aggregated supply curve shifts inwards.

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Annual Development Programme

ADP of Tk. 55, 870 crore (5.5% of GDP) has been proposed for FY 2013-14. In the ADP for FY 2013-14, human resource sector (education, health, and other related sectors) will receive 23 %, overall agricultural sector (agriculture, rural development and rural institution, water resources and other related sectors) 25.4 %, power and energy sector 17.2 % and communication sector (road, railway, bridges, and other related sectors) 23.1 % and other sectors 11.3 % of total allocation.

Overview of Fiscal measures

Increasing revenue: The government will be able to collect a significant amount of
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